Investment firm G Asset offers to take controlling stake in Barnes & Noble for $672 million

Feb 21, 2014
The Associated Press

NEW YORK, N.Y. – Investment firm G Asset has offered to buy 51 per cent of the Barnes & Noble bookstore chain for about $672 million.

The New York firm says its offer is for $22 per share, 31 per cent above the stock’s closing price on Thursday. Barnes & Noble has about 60 million shares outstanding.

Its stock rose 93 cents, or 5.5 per cent, to $17.71 in afternoon trading.

G Asset says Barnes & Noble is “substantially undervalued.” The retailer is trying to turn around its results as more consumers buy books online or in a digital format. The New York company’s sales fell 6.6 per cent at its bookstores and online during the critical holiday shopping season. It has invested heavily in its Nook e-book business but sales in that unit are also dropping.

If the bid were successful, G Asset would spin off the Nook business into its own venture, separate from Barnes & Noble’s retail stores and college bookstores.

New York-based Barnes & Noble said Friday that it has received the offer but did not comment further.

This isn’t G Asset’s first dance with the bookseller.

The firm, managed by Michael Glickstein, a former director of research at hedge fund Mercer Partners, made an offer to buy 51 per cent of Barnes & Noble’s bookstore business in 2012. G Asset wanted to spin off the chain’s college bookstores under that plan, but nothing came of that offer.

Then G Asset last November offered $20 per share for a 51 per cent stake in Barnes & Noble.

G Asset also has another idea for Barnes & Noble. Instead of bidding for 51 per cent of the whole company, it could buy a controlling stake in Barnes & Noble’s Nook e-reader and e-book business, valuing it at $5 per share.

Barnes & Noble Inc. began reporting its Nook business sales separately from its retail business in late 2012 as it evaluated ways to become more profitable.

Founder Leonard Riggio in early 2013 said he wanted to acquire the company’s stores and website, but not the business that makes the Nook readers. He later withdrew that bid.